Aging and Manufacturing

Shuichiro Nishioka, Toshihiro Okubo and Mari Tanaka

Discussion papers from Research Institute of Economy, Trade and Industry (RIETI)

Abstract: This paper examines the causal effects of population aging on manufacturing activity using municipality- and establishment-level data from Japan. Combining the Census of Manufacture with Population Census data for the 1980-2010 period, we exploit predetermined demographic structure to identify the impact of aging on local manufacturing outcomes. We find that population aging leads to large and statistically significant declines in total manufacturing employment, sales, and value added. These effects operate through both extensive and intensive margins: aging reduces the number of manufacturing establishments and lowers employment and output per establishment. We also document increases in manufacturing labor productivity and wages, driven primarily by the rapid exit of less productive plants in aging regions, with little evidence of changes in entry dynamics.

Pages: 32 pages
Date: 2026-05
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Persistent link: https://EconPapers.repec.org/RePEc:eti:dpaper:26042

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